In any action in which a district court already has jurisdiction over some federal claim, we also have supplemental jurisdiction over state claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy.
A woman consummated a mortgage transaction with the mortgage company. Shortly before the close of the transaction, an appraisal was made for her home amounting to $163,000. The mortgagee, however, alleged that the value at the time of the appraisal was actually $ 130,000-135,000, and that her home's value was "substantially and artificially inflated" to increase the loan amount for which she could qualify and thereby increase the mortgage company's potential profit. She was unable to have her mortgage refinanced. A case was filed for violation of the Truth In Lending Act (TILA), Michigan Mortgage Brokers, Lenders and Services Lending Act and a civil conspiracy claim with the District Court for the Northern District of Illinois. Defendants claim lack of jurisdiction between the violations for the TILA and Michigan Mortgage Brokers, Lenders and Services Lending Act claims.
Is there a sufficient nexus between the mortgagee's state law claims and her TILA claim to support supplemental jurisdiction?
The Court held that the facts underlying both state and federal claims combine to tell one story: Skanes did not fully know of her right to cancel her mortgage at its outset; because that mortgage was overstated, she paid too much during the life of her loan; and -- also because of the overstatement -- she has not been able to refinance the mortgage. Thus, because the Court could not conclude that the resolution of one of her state claims would have no effect on the resolution on her federal claims, it could not deny the supplemental jurisdiction here.